Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The workers in Country B will benefit from trade if they:
A. specialize in bananas because they have an absolute advantage in banana production.
B. specialize in tomatoes because their opportunity cost of tomatoes is higher than Country A's.
C. specialize in tomatoes because their opportunity cost of tomatoes is lower than Country A's.
D. specialize in bananas because they have a comparative advantage in banana production.
Answer: C
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Prices are a critical component of the market system
Indicate whether the statement is true or false
The strategy underlying price discrimination is to
a. charge higher prices to customers who have better access to substitutes. b. charge everyone the same price but limit the quantity they are allowed to buy. c. increase total revenue by charging higher prices to those with the most inelastic demand for the product and lower prices to those with the most elastic demand. d. reduce per-unit cost to the firm by charging higher prices to those with the most inelastic demand and lower prices to those with the most elastic demand.
Which of the following would tend to contribute to a U.S. current account surplus?
A. The United States cuts back on American military personnel stationed in Japan. B. U.S. tourists travel in large numbers to Asia. C. The United States makes a unilateral tariff reduction on imported goods. D. Russian vodka becomes increasingly popular in the United States.
Given the availability of the Medicaid program, why are so many poor people uninsured?
A. Because only a fixed percentage of the population can participate in Medicaid at any time. B. Because many poor people earn enough that they do not qualify for Medicaid. C. Because nonincome requirements screen many poor people from the program. D. Because only native-born Americans are eligible for the program.